The AJC asked 10 finalists for a fulltime conservative columnist position to write two columns: one on efforts for a U.S. economic stimulus plan and one on any other topic. Here were the two columns submitted by Kyle Wingfield, the candidate who ultimately was chosen for the job. He was listed as candidate J in the original field of 10.
By Candidate J
Conservatives are supposed to like all tax cuts. But the differences between the cut included in the federal stimulus bill and one proposed in Atlanta offer a chance to re-learn an old lesson: Not all tax cuts are created equal.
The first reference here is to a reduction in federal payroll taxes of $400 annually for individual workers, or $800 for couples. The lump-sum tax rebates that the Bush administration issued last year were largely put into savings or used to pay down debt. President Obama wants the new tax cuts handed out slowly so that people will just spend.
The apparent idea is that the money—about $8 per week per worker—will be so undetectable to individual earners that it will flow unimpeded into the economy, and yet accumulate in such a way that businesses grow and ultimately hire more employees. Here’s the problem: No company, whether it sells cars or houses or hamburgers, can know with any certainty how much it will receive from this aggregation.
This week, my $8 might end up with the barber; next week, a restaurant; and so on. In a city of Atlanta’s size, with many stimulus-spenders, the barber can probably expect to get some sort of consistent bump in business. But will it be enough to buy some new hair dryers? Go on vacation? Hire some help? Who knows?
Tax cuts work when they give individuals or businesses an incentive to take an entrepreneurial risk they wouldn’t have otherwise taken. To do so, there must be some certainty: If I make more money next year by working overtime, or starting a small business on the side, or investing, or hiring someone to help my business grow, I’ll get to keep more of it than I would have kept before. A scatter-shot of cash coming from myriad directions doesn’t do that.
That brings us to the second tax cut. The fastest way to boost employment now is to reduce corporate tax rates. At 35 percent, the federal rate is the second-highest in the developed world. Rather than trying to figure out which businesses deserve to get government help or might benefit from a slight boost in consumer spending, it’d be better to give all businesses a predictable tax cut so that they have the means to hire new workers, or at least avoid layoffs.
Georgia Republicans are trying to do their part, introducing legislation to gradually eliminate the state’s 6 percent corporate tax. As the state tries to sustain its jobs growth of the past decade, every little bit will help.
Instead of cutting the rate between 2012 and 2024, however, legislators could create a bigger boost by moving more quickly and rapidly so that the state doesn’t lose any more ground to countries that are already below the federal 35 percent level. The world’s economy will undergo a great reshaping in the coming years. If Georgia wants to keep from falling behind, this is the kind of “stimulus” it needs.